On the go: The Littlewoods Pensions Scheme has secured almost £1bn of its defined benefit liabilities with insurer Rothesay Life, with the plan’s pension promises now completely covered by bulk annuity contracts.
The £930m transaction, announced on Wednesday, secures the pensions of 6,454 members, 90 per cent of which are deferred. It adds to a 2018 buy-in of pensioner liabilities with Scottish Widows, worth £880m.
The Littlewoods scheme, sponsored by online retailer The Very Group, has eliminated all of its balance sheet risks in timely fashion having derisked its exposure to interest rates and inflation, illustrating the split fortunes of DB schemes since the 2008 global financial crisis.
The deal is the largest full-scheme transaction to be completed this year, and trustees were reportedly able to seize on pricing dislocations that appeared during March’s bond market volatility. However, the scheme also negotiated a price lock with Rothesay, immunising it from any resulting downwards fall in bond yields.
Colin Thwaite, chair of the scheme’s trustee board, said: “I am delighted that, through this transaction with Rothesay Life, we have further secured the pension benefits for all our members.
“Guaranteeing our pension obligations has been our long-term goal, and it is a testament to the quality of our advisers and the longstanding support and collaboration with The Very Group and its shareholders that we could secure this transaction in the current market.”
According to Littlewoods’ adviser on the transaction, LCP, the scheme’s success in insuring deferred liabilities demonstrates that attractive pricing is available for schemes that are well prepared.
As well as appointing LCP, the plan worked with investment advisers Willis Towers Watson to carefully manage the derisking journey, while work with scheme actuary Mercer and Arc Pensions Law helped resolve issues with guaranteed minimum pensions.
Sammy Cooper-Smith, head of business development at Rothesay Life, said the scheme’s proactive approach was the key to transacting through the remote working of lockdown: “The trustees have been in close contact with the market place for a number of years, keeping us informed of progress on their derisking journey.
“This has kept this scheme at the forefront of the market, which has enabled the trustees to secure the benefits at an opportune time from a funding perspective. We are delighted to have been entrusted by the trustees to provide the scheme benefits to more than 6,000 beneficiaries.”
